In May 2022 a consortium led by American businessman Todd Boehly and Clearlake Capital acquired Chelsea for £2.5 bln (plus £1.75 bln infrastructure commitment), following Roman Abramovich’s decision to sell the club as a result of Russia’s invasion of Ukraine. Accordingly, 2022/23 was the first full season completed under the new ownership.
Chelsea have now lost money in four of the last five years,
adding up to a hefty £434m, including three losses over £100m in this period.
The good news is that losses have reduced two years in a row, albeit from a
chunky £156m in 2020/21.
Chelsea are no strangers to posting large losses, being
responsible for two of the four highest losses ever reported in the Premier
League (and five of the top 20). Last season’s £90m deficit just sneaks into
this list. they have lost nearly £900m
from day-to-day business in the last five years, which takes some doing.
Chelsea’s pre-tax loss reduced from £121m to £90m, mainly
thanks to £107m once-off accounting entries.
These includged the sale of hotel buildings to another group company for
£77m and £31m other operating income. In
fairness, very few clubs make an operating profit, but Chelsea’s £249m loss was
comfortably the worst in the Premier League last season, nearly £100m more than
the next highest, Leicester City £151m.
Revenue
Revenue rose by £31m (6%) from £481m to a club record £512m,
breaking through the half billion pound barrier for the first time, though this
was wiped out by a £37m (5%) increase in operating expenses to £761m.
The loss would have been even higher without the benefit of
£63m profit from player sales, though this was only around half of the previous
season’s £123m. However, net interest payable was up from £2m to £12m.
The higher revenue was largely driven by commercial
increasing £33m (19%) from £177m to £210m, while match day was also up £7m
(11%) from £69m to £76m. Both of these established new club records. This was
partly due to Chelsea being able to operate without the government restrictions
placed on the club in the prior year.
However, broadcasting fell £9m (4%) from £235m to £226m,
mainly because of the worse performance in the Premier League.
Chelsea’s £66m revenue growth in the past four years
compares favourably with most of the Big Six, only significantly outpaced by
Manchester City’s £178m.
Chelsea’s match day income has only increased by £6m over
the last decade, while other clubs have invested in stadium development,
leading to significant growth, especially Tottenham (up £77m), Liverpool (up
£35m) and Manchester City (up £32m).
This is Chelsea’s Achilles heel in terms of revenue, as
their £76m is far below some of their rivals, especially Manchester United,
Tottenham and Arsenal, who all generate well over £100m.However, the club does
benefit from steep London prices, as their cheapest season tickets are the
third highest in the Premier League, only less than Arsenal and Tottenham.
One point worth noting is the difference in fortunes between
Chelsea and Tottenham in the course of the last decade: the Blues were £139m
ahead of their North London rivals in 2014, but were £37m behind last season,
i.e. a massive swing of £176m.
Chelsea’s £90m pre-tax loss is not great, but two clubs in
the Premier League did even worse last season, namely Aston Villa £120m and
Tottenham £95m. Many other clubs also posted large losses, including Leicester
City £90m, Everton £89m and Southampton £87m.
Importance of player
sales
Chelsea made £63m profit from player sales, which by most
standards is pretty good, but is only around half of the previous season’s
£123m. A number of big deals were also agreed just before the end of June 2023,
namely Kai Havertz to Arsenal, Mateo Kovacic to Manchester City, Kalidou
Koulibaly to Al-Hilal and Ruben Loftus-Cheek to Milan
Chelsea’s business model has been far more reliant on player
sales than any other major English club, so they generated more than half a
billion pounds in the last six years, including good money from Academy
graduates, who represent pure profit in the books. This included no fewer than
three years when they generated more than £100m.
To place this into perspective, Chelsea’s £530m profit from
player sales in this period was around £150m more than the next highest club in
the Premier League, namely Manchester City £376m.
The accounts state that Chelsea have only made £48m to date
this season from the disposal of the registrations of 10 players. Of course, there is still time for Chelsea to
boost their player sales, but these would have to be registered by 30th June
for them to be included in the 2023/24 accounts. Whether the Blues can realise
decent fees is debatable, as other clubs will be well aware of the club’s PSR
issues, so will use this to their advantage and look to pick up players for low
fees. It might also be difficult to match the wages paid by a leading club, so
players might be unwilling to leave.
Europe
Chelsea earned €96m for reaching the Champions League
quarter-finals, which was €4m higher than the €92m they received the previous
season for getting to the same stage.
Chelsea’s record in Europe was very impressive in the
Abramovich era, as they won both the Champions League and Europa League twice.
Their victory against Manchester City in the 2020/21 Champions League final was
worth €120m on its own.
Chelsea have earned half a billion Euros from Europe in the
last six years, though this was still a fair way behind Manchester City €615m
and Liverpool €564m. On the other hand, this was a lot higher than Manchester
United €355m, Tottenham €322m and especially Arsenal €150m.
Chelsea’s wages have increased by £118m (41%) in the last
four years, which is the highest growth of the Big Six, even more than
Manchester City’s £108m. In fact, Chelsea’s £404m wages are the second highest
ever in the Premier League, while they have had three of the top ten – all with
wage bills in the last three seasons. They are only the second English club to
break through the £400m barrier. Value
for money?
Chelsea splashed out an incredible £745m on player purchases
in 2022/23, which was the highest by some distance in the Premier League, more
than the next three clubs combined (Arsenal £251m, Manchester United £247m and
Manchester City £221m). Chelsea’s £745m
gross spend last season is easily an all-time high for the Premier League, over
twice as much as Manchester City’s £328m in 2017/18.
Chelsea have continued to invest in their squad this season
with the accounts stating that they have spent another £454m, bringing the
total outlay since Boehly’s consortium arrived to a staggering £1.2 bln in less
than two seasons.
Abramovich had regularly provided cash injections to Chelsea
during his tenure, putting in over £1.5 bln, resulting in the highest debt in
the Premier League. However, this was written-off as part of the club sale.
It’s one thing applying a series of accounting “tricks” to
satisfy Profitability and Sustainability Regulations, but the reality is that
this is a pretty awful set of financial results, notwithstanding the record
revenue. Chelsea fans will probably not
care too much about the balance sheet, so long as the owners continue to
provide financial support, but they will be concerned that the massive
investment in new players has so far produced little success on the pitch.
My personal view is that the new owners are not delivering so far on their promises. Achieving success in the Premier League is harder than it looks to outsiders. The constraints of the Stamford Bridge stadium and the cost and difficulty of redeveloping it or relocating elsewhere (at least a twenty year old story) are big challenges.
Roman Abramovich provided the funds and kept his interventions to the strategic level. I never thought he was a running dog of Putin. To some extent he had to at least avoid offending him and meeting an early end, and Chelsea gave him some useful insurance, but I think his heart was in the club.
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